Estates: Your Will online forever

Solomons-financial-advisor-wimbledon-blogger

Estates: Your Will online forever

You may not be aware that the Government has now made it possible to search for Wills online. So once you are gone, your last Will and testament is available for anyone to see, should they wish to. Essentially it is nothing more than a searchable database which enables anyone to pay £10 to obtain an electronic copy of historic Wills, assuming the system works, you will receive your copy within about 10 days. It is free to search, but the Will itself costs £10.

It is estimated that there are over 41 million Wills and Grants of Probate on the database, which are compiled from 1858 onwards for England and Wales. I’m reminded of the film “Waking Ned Devine” which is a comedy about a man who wins the lottery but dies from shock, to collect his winnings, he has to be alive, leaving his community to concoct some creative solutions.

Implications

There will be some people who certainly won’t relish the prospect of their Will being published online – perhaps a few celebrities or even Royalty. Remember that for some people a Will reveals the state of family relationships at the point the Will was made.

HMRC better informed?

Perhaps the more important point about a Will or Grant of Probate is that assets are valued and those that are inherited ought to be more visible. This essentially provides a money trail for HMRC to follow. Remember evading tax is illegal, but with this approach it really ought to be the case that HMRC are able to now close in on those that don’t declare sufficient assets in their estate.

There are also implications for capital gains tax too – if you inherit an asset, then unless you sell it, or gift it, there is reasonable grounds to assume that you still own it. If it disappears from your asset inventory, surely questions would be asked which have a knock on effect for prospect of unpaid capital gains tax and perhaps even income tax (if the asset generated income). In short, anyone that isn’t being crystal clear about their assets is likely to come under greater scrutiny.

Other implications also revolve around more “joined up thinking” in that your DVLA licence and car insurance are connected and if you now try to rent or hire a car, you need to input your NI number so that a DVLA permission certificate can be generated. This could be used to link to your investments (pensions and ISAs in particular) but why not your household insurance policy, meant to insure your physical assets.

All in all, I think this will lead to deeper and better information about us all, which will to some extent be publicly available, but more importantly available to HMRC. So make sure you declare your assets and taxes properly. Above all make sure your Will is current and reflects your wishes.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Estates: Your Will online foreverDominic2023-12-01T12:40:15+00:00

Your FSCS protection is reducing

FSCS compensation is reducing

Today the Government announced that from 1st January 2016 the FSCS compensation limit will be reduced from £85,000 to £75,000. This will achieve two things, firstly it will make some people panic that the reason must be due to some impending crash, the other will be that some people will need to shuffle £10,000 from various bank accounts into a different one.

In practice, the limit is reviewed every 5 years and was last reviewed in 2010. This is all based on European directives (yes another one), ingeniously entitled the Deposit Guarantee Schemes Directive, which is priced in Euros and is for the sum of €100,000 which is worth a bit less than it was in 2010, the pound and UK economy are stronger – hence revalued to £75,000. It is a little odd to make the announcement mid-Greek Euro crisis and of course we have the prospect of our own UK referendum on Europe.

Long story short, your protection is in place until the end of the year, but you will need to take action before then to move funds and open alternative deposit accounts.

Banking License Caveat

Please be aware that the FSCS protection is per person per bank, not per bank account and a significant issue is that several banks (and Building Societies) share the same banking license, so having accounts with them will make no difference to the total compensation that you would receive. You can find information about shared licenses here.

That said, and I really don’t want to alarm anyone, but if several major Banks collapsed at the same time, frankly there is little real prospect of the compensation having much relevance. This is for unusual one-off events where a single Bank fails. I very much doubt a major systemic failure would see £85,000 or the new £75,000 returned to you for each account held.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Your FSCS protection is reducingDominic2023-12-01T12:40:15+00:00

Investing: What are ETFs?

An ETF (Exchange Traded Fund) is one of a number of financial products or “instruments” which are better described as ETPs – Exchange Traded Products. In very simple terms, it is an investment that can be traded in pretty much the same way on any world stock market. They are relatively new (beginning life in 1993) but are growing in popularity.

Low cost and transparent

The main advantage of an ETP is that they are often very low-cost and transparent, particularly as the total cost of ownership is very clear. As we know, there are very few things that we can control in the investment world – but cost is one that we can exercise some degree of control over. We cannot control markets (at least not legally!) and whilst use strategies to take account of what is going on in the world, I believe that attempting to time investments to produce superior returns is pretty much beyond everyone. Admittedly it looks very easy in hindsight, but the truth is rather different and knowing when to get out is easier than knowing when to get back in…. and both decisions need to be made. Low cost is not the same as “cheap and nasty” and more than high cost is the same as quality. Cost of ownership is one of many aspects that we consider for our clients.

Focus which enables diversity

So an ETP offers a low-cost approach to accessing markets. In addition they can also provide tremendous focus. If you really want to invest in something specific an ETP will invariably have a solution. Arguably an ETP “democratizes” investing, making is just as cost-effective to invest £100 as £1m. However there are some snags.

Evolving market – teething troubles

Firstly, an ETP doesn’t have the advantage of the FSCS (compensation scheme) behind it. Frankly that may not bother you as one can make the argument that the such protection is paper-thin in the event of a serious global meltdown. Secondly as a “security” an ETP is traded, often via a stockbroker, which means dealing costs. If the amount is large enough, then this can be an insignificant sum, but clearly it’s not for those that invest modest amounts each month or trade frequently with small sums. Many ETPs are priced in non-sterling currencies, such as the dollar, thus exposing you to increased currency risk. Finally accessibility is still limited, of course I can find the best way for you to access ETFs and resolve these snags, but the choice of providers that genuinely offer trading facilities and best execution practice is fairly small – this is an evolving market. Once these costs are included, often an ETP can be more expensive than a good low-cost Unit Trust or OEIC – which have more “protection”. So I would argue that for all but a few, the main appeal at present remains the ability to use highly specific investment strategies to add value to your portfolio. Essentially this comes down to your investment experience and requirements – which ought to serve your goals, not simply a different investment experience.

However, I want to make it very clear that ETPs can make a lot of sense for the right investor and something that we are able and willing to use appropriately, after all this is part of being independent and being able to access the entire market for solutions.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Investing: What are ETFs?Dominic2023-12-01T12:40:14+00:00

Overseas Pensions

Overseas Pensions?

I wonder if you have been persuaded to invest in an overseas pension? The new flexible pension rules that permit earlier access to a pension fund have caused more than the odd ripple in the global pensions world. We are highly connected to other jurisdictions and particularly those within the Commonwealth.

82% culling

HMRC recently reviewed its list of pensions that it “recognises” (which isnt the same as endorses or approves) but clearly suggests a connection. Earlier in June there were 3,811 overseas pensions on the HMRC ROP list, this has now been culled to just 663 – a reduction of about 82%. See the list here: HMRC site

It may well be that there are some “reinstatement” in time, but essentially the vast majority of overseas pensions failed to respond to the HMRC, who wanted the schemes to confirm that investors could not access their pension before the age of 55 unless, and only if, the member of the pension scheme is in ill-health – for which read – seriously unwell.

Australians in Wimbledon

A lack of response meant cut from the list. Those with Australian pensions this is a particular blow and today there is only one recognised Australian pension. Not so great for all you Australians living in Wimbledon and parts of south-west London. This will impact anyone in the process of moving their pension to an overseas pension and could result in hefty punitive “unauthorised payment charges”…. which can be 55%.

Not Just the Aussies

Obviously it isn’t just Australians that this impacts, London has many people from all over the world that are here for perhaps a short working period in their lives or much longer. This also impacts British domiciled people who wish to emigrate.

Loopholes – a pension is meant to be a pension

The motivation for this is that pensions are meant for retirement. Tax relief is provided on contributions here in the UK, but ultimately income would be taxed. Historically it has been possible in some circumstances to transfer a pension abroad – largely if you are emigrating or returning home. However, as with many things offshore, some loopholes are exploited where terms are more favourable – largely because tax relief in those jurisdictions wasn’t provided in the first place.

Overseas pensions requires specialist advice and not something that should be entered into lightly.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Overseas PensionsDominic2023-12-01T12:40:13+00:00

Investing: Greece

Solomons-financial-advisor-guest-blogger-SW

The Greferendum

We’ll know more early next week when the result of this weekend’s Greferendum is known (assuming that is, that the referendum is carried through successfully; nothing is certain). Actually, the wording of the referendum is a little, erm, tame…

‘Should the plan of the agreement be accepted, which was submitted by the European Commission, the European Central Bank, the International Monetary Fund, in the Eurogroup of 25.6.2015, and comprises two parts which constitute their unified proposal? The first document is entitled Reforms For The Completion Of The Current Program And Beyond and the second Preliminary Debt Sustainability Analysis’.

I had expected a more direct question about euro membership. I don’t doubt that that particular question will be addressed soon but, for now, the choice is simply ‘yes’ the deal that has been offered by the troika should be accepted or ‘no’ it should not be accepted.

If a ‘yes’ vote is forthcoming I see three possibilities…

A fourth election in four years is set in motion. The current government is campaigning for a ‘no’, so a ‘yes’ vote probably undermines their legitimacy
the current government leads new negotiations and, with further concessions, secures an interim agreement as a stepping stone to the next bailout proper
the current government leads new negotiations which fail to secure an agreement; sparking another referendum (addressing euro membership much more directly) or, perhaps more likely, another general election

If, on the other hand, a ‘no’ vote wins I see two possibilities…

The current government leads new negotiations and, with no further concessions, secures an interim agreement as a stepping stone to the next bailout proper
The current government leads new negotiations which fail to secure an agreement; sparking another referendum (addressing euro membership much more directly) or, perhaps more likely, another general election.

Ultimately there’s the possibility of a Grexit either way. Clearly though, a Grexit is likely to happen much more quickly if the ‘no’ vote wins. For what it’s worth, I still think a voluntary Grexit is unlikely until the issue of euro-membership is directly addressed with the electorate. An involuntary Grexit – an expulsion from the euro-group – is the more likely scenario.

Super Mario (Draghi)

I’m not dismissive of the ‘contagion’ hypothesis. There is a real risk that discontent spreads from Greece to Portugal, Spain and Italy. And, if a crisis in the Greek mould makes it as far as Spain, it would almost certainly spell disaster. But before that happens I think we will see the European Central Bank (ECB) flex its muscles.

Remember, in July 2012, when Mario Draghi, president of the ECB, said ‘within our mandate, the ECB is ready to do whatever it takes to preserve the euro… [and] believe me, it will be enough’. His statement had an incredible effect on bond yields in the euro-zone. Indeed, that statement alone was enough to limit the euro crisis and it prepared the ground for the nascent recovery we are seeing today.

Back then, the ECB was a central bank heavily constrained by an uncertain mandate. Now, senior court rulings on the legality of some of the ECB’s proposed measures (which had been subject to heavy legal scrutiny in the last three years or so) have defined and broadened the ECB’s mandate. In short, the ECB has considerably more power today than it did in 2012.

I am convinced that the ECB will indeed preserve the euro. I’m certainly not betting against it.

Implications for the stock market

Just to be clear, I’m still in accord with JP Morgan’s Stephanie Flanders on this one…

‘The key takeaway for investors is that the Greek crisis does not pose an existential threat to either the euro system or to Europe’s financial system. Ultimately we do not believe that Greece alone will be enough to put the European recovery into reverse, or that it will prevent a gradual improvement in European corporate earnings. But there is still plenty of scope for nasty surprises and renewed volatility if the Greek situation continues to deteriorate.’ (Source: JPM Market Insights, 19 June 2015).

And at the risk of repeating myself…

Back in 2011, when the euro crisis was at its peak, a Greek default would have been a catastrophe for the euro-zone. It would have spelt disaster for Europe’s banking system and various stock markets around the world would have plummeted. The same is probably not true today; a Greek default would not be a disaster either for the EU, the Eurozone or the stock market (in the long-run at least).

Of course, there is a great deal of complacency. Far too many managers and commentators are dismissive of a potential default; its eventuality would come as a shock to some and the stock market would react sharply while that complacency is washed away.

But does a Greek exit fundamentally alter the long-term potential for listed companies on the continent? How would such a happenstance irreversibly damage the likes of Daimler, Siemens, Louis Vuitton, Total, Airbus, Unilever or Heineken?

In conclusion

Investors should hold risky assets only in the proportions that they are willing and able to hold for the duration of a significant downturn. I know that is easier said than done when interest rates are as low as they are. Investors have a seemingly irresistible urge to ‘reach for yield’. But there is one thing that destroys wealth much more effectively than choosing the wrong fund here or there; investors that blindly carry risk almost always sell out at the first sign of trouble (effectively they ‘buy high and sell low’).

Steve Williams

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Investing: GreeceDominic2023-12-01T12:40:13+00:00

Investing and the unfolding Greek tragedy

It is undeniable that the Greeks are facing an enormous decision of whether to stick or twist. The size of the Greek economy is not terribly significant on a global scale, but it is certainly signficant to those working within it – and of course it is smaller this week than it was last week, however the markets are reacting, arguably over-reacting in typical fashion when uncertainty is rife. The real concern is not really Greece, but other EU States that may be minded to opt for a similar take it or leave it approach to their economic obligations.

I think it has been well documented that the Greek tax system has been painfully inadequate over the years and the recent austerity measures have been punitive. There is a degree to which we might say that bad planning has resulted in bad results, or more colloquially – the free ride is over. However, before we get too sanctimonious, the UK also spends more than it earns and of course this isn’t sustainable in the longer-term.

Financial Planning building block – a budget

To budget seems to be a term last used as a verb rather than an idea “post-war”. The Government here has some difficult decisions and of course they are contentious, earn more (raise taxes) or spend less (cut services) seems to be the only thought processes that politicians are capable of. I am left to wonder if this binary approach to life that is taken by most Governments is really the only viable option. At its heart, people get forgotten. On the one hand more money (lower taxes) is very much like a Trojan horse – at least until we can afford to have tax cuts, equally a State that spends without apparent regard for the future, can lull us into feeling that everything is “ok”…. but ultimately the merry-go-round comes to a stop. I know this isn’t easy, who likes paying more tax?

Paying the Price…or the ferryman

I’m reminded of a Volkswagen advert that is currently around – “You Pay For What You Get”. Perhaps you know it – the guy that buys a cheaper parachute, or climbing rope, or shark cage holiday experience. Some decisions have possible life threatening consequences. We all need to make good decisions, the best we can with what we can afford. It’s unfortunate that this is invariably true in life, even love has a cost. Paris and the Trojans ultimately paid for kidnapping Helen, princess of Sparta (life lesson – don’t mess with the Spartans).

I looked back on a piece I wrote nearly 3 years ago (17 August 2012) called summer holidays come to an end. In which I warned of the problems of continued funding of nations that cannot afford the debt. We need to find alternatives.

Don’t kill the messenger (Tigranes)

Sadly, your investment will be worth less this week than it was last, due to the market valuations at present. Whilst these are unusual times, market uncertainty is decidedly usual (normal) and the key thing to remember is that investments are established for a life-long approach not the next week. Yes there is bad news (when isn’t there?) but recovery will occur…. it’s just a case of when, which is of course no small matter and something that I am keeping under review. I feel very sorry for the Greeks who are experiencing a pain that we would do well to avoid.

Here’s a VW advert that I hadn’t seen.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Investing and the unfolding Greek tragedyDominic2023-12-01T12:40:12+00:00